Trump’s Trade War With China Could Hit Tesla Hard

APR 4 2018 BY ERIC LOVEDAY 104

President Trump is stirring up a different type of war with China and it may impact Tesla more so than any other U.S. automaker.

This trade war between the two nations began with Trump announcing that tariffs would be placed on some $50 billion in Chinese goods.

It’s What Musk Wanted – Musk Urges Trump To Push For Fair Auto Trade Policies With China

It was believed China wouldn’t retaliate, or at least wouldn’t do so swiftly, but that wasn’t the case.

China immediately fired back, saying that it too would place import duties on U.S. items such as soy beans, planes, cars, chemicals and beef.

Related – China Is Second To Only U.S. In Tesla Model 3 Pre-Orders

Trump then Tweeted the following early this morning:

On the automotive front, just a few U.S. makes import vehicles into China (most automakers have joint venture with Chinese manufacturers to avoid import duties) in volume. Ford’s Lincoln brand and Tesla appear to be most impacted if China moves forward with its retaliatory import duties.

Oddly enough, Tesla CEO Elon Musk urged Trump to push hard in regards to equal import duties for China & the U.S., but the result may be less than ideal. In trying to equalize import duties on autos, China seems to now be willing to strike back hard by upping those duties even more for automakers like Tesla.

Trump And Musk Tweets from March 7 And 8

It took the electric automaker quite some time to gain a foothold in China in regards to sales, but now it’s a large market for the U.S. automaker, who even today must deal with significant import duties. If those duties increase even more due to this trade war, Tesla will almost certainly see sales fall in China and/or it will have to reconsider its no-joint-venture-with-a-Chinese-automaker position.

Source: Reuters

Categories: China, Tesla

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104 Comments on "Trump’s Trade War With China Could Hit Tesla Hard"

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China’s going down a dangerous path.
Now they’re pretending to have a temper tantrum with the temper tantrum King?
Pushing Trump to make an unstable and illogical reaction?
This is dangerous for them, more than for us.

I disagree, China has access to Europe and Africa. They have competent technocrats and a future vision that USA lacks. I expect US to suffer more from this than China which can react faster to counter anything USA will unleash

There is such a thing as reality and the truth is both will suffer, but China has huge trade deficit with the U.S. so it doesn’t great take a flight of fancy to say they will suffer more.

Couldn’t China just sell all their US bonds and sink the US market?

At ray said: “Couldn’t China just sell all their US bonds and sink the US market?”
—————-

China sinking its fattest cash cow sinks China and they know it.

And likely USA would not be greatly impacted by China pulling back from USA debt securities… it may in fact impact China more negatively once its demonstrated that USA is not hostage to China held debt.

The Fed would take emergency action and put more debt on their balance sheet. Call it emergency quantitative easing. The USA holds the trump card (no pun intended) in this scenario.

The reason why China buys our bonds is because the trade deficit will produce a HUGE inflation. So, by buying our bonds, they basically send the money back to America without having bought any real thing.
Now, if they dump just 10% of their bonds, their inflation will go up more than 5%.
Now, china HAS already dumped some bonds. But if you look at their inflation rate, that has also cause them to move from 1.5-2.9%. And keep in mind that, that is the OFFICIAL rate. The reality is that inflation is much high.

windbourne,
It is not clear to me why the Chinese wouldn’t just purchase US goods instead with the excess cash. Boeing planes, Teslas for all party members, etc. How would doing this instead be inflationary in China?

China has a huge trade SURPLUS with the US.

CHINA has trade deficit???

Maybe in whatever Bizarro world exists inside his head, but certainly not the real world!

Yes, there is a reason why China is building up Africa.
China is building relations with other countries instead of bombing them into submission. This will turn out to be the better strategy in the long run.
America’s problem isn’t Trump but the warhawks of the deep state. That is a much tougher problem to solve.

John Bolton? The number of military/x-military in the Trump cabinet? His lust for police-states, like Philippines/Duterte, or how Russia is run by Putin/KGB?

True. These countries don’t have much “Deep State” policies, rules, and innovation going on. They have guns & thugs.

Yes. Trump is failing badly to “drain the swamp”.
That message was correct, the execution however is quite lacking.

America does have an issue with warhawks.
However, any nation that is getting ‘help’ from china is committing suicide. Venezuela’s current situation is most because of the deal they did with CHina.

Could you tell us more about that?

LOL! No it’s not. It’s because of Hugo Chavez’ insane socialist politics (That Maduro has continued) that Venezuela is messed up.

That’s how you respond to the Cheeto in Chief: in kind.

China has a world market, they also have more than $1 trillion of our bonds they could sell at discount ruining our bond auctions.

How much would those bonds be worth if they started dumping them? Would you want to see your net worth spiral down by dumping any asset you held? That would be suicide for China’s economy and could lead to a revolt, not something their government wants.

Since we sell much less to them than they sell to us it would have a far greater impact on their economy than ours. Our economy and place as a customer for their goods can’t be replaced by an African country or all of Africa or any other country or group of countries so what happens to their factories and workers if they lost our market? Yes, we might see the cost of some of our goods go up but there is a lot of cheap labor throughout Asia outside of China. India would love it, Korea would love it and so would Japan and the Philippines.

Well Trump is going down a rabbit hole, following his Fox News opinionator masquerading as economist white rabbit Kudlow to wonderland.

China smartly targeted US exports that come from Congressional districts that supported Trump. CA and NV, home of Tesla’s car products, are in non-Trump Congressional districts and states.

US does not have a chance of winning this. Everybody looses but US the most.

That’s “loses”, but yes. Nobody wins a trade war, altho some may lose more than others.

I’d love to see China hit with sanctions for the way it flagrantly cheats on trade, but those sanctions would have to be imposed by a Presidential administration which had a clear vision, firm purpose, and had not already been repeatedly shown to easily cave under pressure. Or heck, perhaps just a Presidential administration which was not in a permanent state of chaos, and practically leaderless in international affairs — in that the State Department has been hollowed out, with most of its best leaders and many of its most experienced foreign service officers having either resigned or been fired!

+ 100

U obviously have NO idea of what you are talking about. America has the LEAST to lose here. Once Europe realizes that RIGHT NOW, they can shake off the CHinese yolk before china does to them, what they have been doing to us, they will change. Trump is an idiot in many ways, but on this issue, he is finally, spot on. Taken from below. We export 130B to CHina. America had 18T GDP in 2016. IOW, CHina’s exports represents .7% of our GDP. We lose more in many of our mild recessions. China Exports 560B to us. China had 11T GDP in 2016. IOW, America is 5% of China’s GDP. This would be a GREAT depression to CHina’s economy. And if CHina dumps their American bonds, they COULD depress America’s money a bit. However, it would destroy CHina’s holding, AND would could massive inflation in CHina. In fact, if CHina were to dump even 10% of their bonds, they will be hit with more than 5% inflation. Also, per WTO rules, if 2-way trade between 2 nations is off by more than 10%, the one that is being hurt, can LEGALLY tariff. Technically, by WTO Rules, America has the… Read more »

can you explain why all trump’s brands are made in china?

believe what you believe but they do not become fact.

trump’s brands are over there because China manipulates their money and it was cheap.
And trump was/is not a patriot.

BTW, what was a belief in what I posted vs a fact?
EVERYTHING that I posted dealing with the chinese/American trade is a fact.

(⌐■_■) Trollnonymous

Before you ask that, you need to answer why it costs exponentially more for the same tie, cap, etc using the same template, same machine to be made here in the US vs. China.

That’s certainly abusing the term “exponentially”, unless you really do mean the difference in cost is actually growing increasingly fast over time.

ASSuming this happens, this will mean Teslas will be hit with a 50% tariff. Unlike GM or Ford, Tesla doesn’t have a Chinese factory it can shift production to to escape the tariffs.
Goodbye Tesla sales in China. Ouch.

Just like that from the local GM/Chevy Bolt expert, eh? Why do you waste your time here, with your knowledge, I’d be making gold working on something really big??

Someone has to try and beat some sense into the TSLA fanbois. It’s a thankless job. 😉

It would be nice if you can do it without constantly looking like a fanboy of the other company, you know. Just saying … you don;t want to look like Evannex of GM, do you?

Yeah, Tesla did not give away all their technology to the Chinese government through a forced partnership with a Chinese state owned company like GM and other have.

However, Telsa already has more demand in all the non-China countries than production.

It loses no total sales if it can’t sell in China, it just sells it’s cars elsewhere.

Thus China in the short-term has ZERO effect on Tesla’s sales.

From article: “Trump’s Trade War With China Could Hit Tesla Hard” ———- If someone has for years been throwing rocks at you… and you for years have allowed it with no response except kindly asking the adversary to stop throwing the rocks… then one day to get the adversary’s attention you pick up a few of those thrown rocks and throw them back the other direction… China has unilaterally been in a trade war with USA for many years. Is say unilaterally because the USA has not responded to the very hostile trade policies of China. China for many years has been successful in bribing USA politicians (those bribes take many sophisticated forms) for the USA to keep in place lopsided trade rules in favor of China…. and so China is upset that Trump wants to disrupt that arrangement… and some of the USA political elites that have built a comfortable life supporting China in those trades policies also are upset Trump aims to disrupt the status quo. Further, China has been for a long while without reservation steeling industrial IP (a China state military sponsored program to aid China state owned commercial ventures ) and also engaging in trade… Read more »

Completely agree. I am against just about anything that Trump does but this is the one thing that I actually agree with him on.

+100. I agree.

Nonsens. China produced all the stuff we wanted for us, cheap, while having themselves all the pollution and other suffering caused by making our stuff.

We exported pollution and human suffering for a relatively low price.

baloney.
China basically stole the manufacturing.
In addition, it was not our choice that they pollute.
That is 100% THEIR fault.
This idea that we are responsible for their pollution is a joke.
FUnny thing is, that ppl like you will scream bloody murder about America polluting in the 60s, when we did not know better.

Still I doubt the abrupt way he breaks the trade relationship by publicly humiliating the chinese partner and imposing tariffs on them as if they were sanctions; don’t know if this ‘well balanced strategy” is the best to start or even end negotiations.. Like someone mentioned on twitter ; Trade wars are easy to start, but hard to stop. Once the trains are rolling to the frontline… it’s hard to change positions and save fzce for all parties involved

Tell us more about that please.

The main problem is that the wrong person has been chosen to be the President of the US.

True, but the next contender would’ve expanded war in middle east and conflict with Russia. Best would’ve been someone who knows little (ah, le poe? is that French?) and doesn’t do much. But like little children, most people look for daddy figure to solve our problems for us.

Yes, much better to have someone controlled by Putin, than opposed to Putin’s murderous and thuggish ways. Great point.

Before any of this, China had a 25% tarrif on all US made cars entering their country. The US had a 2.5% tariff on China made cars. Not only that, all US car companies wanting to setup a factory in China, had to be a minority partner with a Chinese company which meant technology transfer.

Trump simply reciprocated the 25% tariffs without adding the clause all Chinese car companies setting up in the USA have to have a majority US partner.

China is raising their tariff to 50%, so we should simply raise the tariff to 50%. China started this whole mess via unfair trade. Finally the US is doing something about it.

And how many cars does the US import from China? China is a Communist country and not a capitalist country. Their government can do anything they want and if you want to do business their then you have to play by their rules.
Why didn’t the President make It harder for Chinese businesses to work in the US? They are buying all these companies in the US, but nobody seems to care about that. The Chinese are buying a lot of houses in cash to send their children here to go to college, but nobody cares about that. Rich Chinese citizens can easily buy their way into a US green card, but nobody cares about that.

@ray said: “And how many cars does the US import from China?”
—————

China desires to do with EV cars what they did with solar panels… if the USA allows China to do that remains to be seen. Thus far, China has only received (and only recently) a soft hand slap on the solar panel export dumping.

What China did with solar panels was bringing their price down for everybody, not just for the Chinese. We all profit from that. As does the world.

yes and no.
It really does NOT help the west.
Basically, CHina increased their gov subsidies and dumping to make up for that tariff. So, it is not working the way that it should. It was designed to help bring back manufacturing to America, but china’s gov is interfering with it, against WTO rules.

We need to put a variable tariff on chinese cells/panels, such that they have a MINIMUM price.

“And how many cars does the US import from China?”

Ah, here is someone who has been paying attention!

That’s the problem with El Trumpo’s obsession with “reciprocity”… how he loves that word! Reciprocity is only useful in certain circumstances; it’s not a one-size-fits-all political or business strategy. But for someone of his limited intelligence, it’s understandable why he seems to think that’s the Holy Grail of strategy.

Typical low information anti-Trump nonsense.

How so???

The term “low information” certainly seems relevant to that comment! 🙄

Look, I am no fan of trumps. His recent tax actions are a DISASTER in the making.
His attacks on Canada and Mexico are INSANE.

BUT, THIS is the right action. Finally.
If we can get China to do HONEST 2-way trade with the west, or simply obey WTO, then things will work out.
But at this time, that is NOT the case.

Trump should have made it harder for Chinese companies to business in the US by simply mirroring the hurdles the Chinese put up for foreign firms.

Prior administrations and Congress have done nothing about this. Finally someone is doing something to protect America

Actually, I am fine with Rich Chinese citizens coming here. Generally, they slowly turn.
The issue is that you have to be careful since about 1-2 in 10 are spies. Yes, 10-20% of chinese here are working for the Chinese gov.

Yup, better than Ford or GM giving away the keys to the kingdom.

Amazing how short term greed can lead any CEO to agreeing to this:
“If you wanna sell here, you gotta build them here by a 51% owned company that belongs to me. So now I’ll have your IP.”

They tried that crap too on high performance computing. It wasn’t enough that those high end computers are already made in China (so they have all the design files) but they came out with a new rule that stipulated they must be DESIGNED by Chinese. Otherwise no government sales.

And, china put export tariffs on a number of western parted electronics.
We need to stop this.
We are slitting our own throat.

Add on top of that a 17% VAT at the border. The VAT is also charged on the tariff! Chinese domestic builders get mostly exempted from the VAT as a production credit.

BINGO.
Interestingly, they also back off the tariffs and VAT on a number of non-western nations.

There is nothing fair for china’s dealings with the west.
I am hoping that Europe will realize that and join in on this.
If they do, China will be forced to start obeying WTO, which they are a LONG ways away from.

Somebody has been paying attention.

We really need to make our tariff variable and say that it is equal to ALL that China charges, plus 2%.
That means 17% vat, along with the tariff, along with 2%.

Now, to get Trump to re-do his taxes and do them RIGHT.

How is this trade war going to develop further?

Perhaps we both put extreme tariffs in place on everything. Once that settles out we can start to restore trade piecemeal.

Sure after the worldwide depression is over that might happen. For historical reference see the Smoot Hadley Act during the depression era. No one wins a trade war, we will all lose over this if it escalates too far. https://en.m.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act

U really need to read that. Smoot-hawley was NOT against 1 nation. It was against ALL NATIONS. In addition, other nations had already been raising their own tariffs.
So, will these actions lead to any consequence to the world? NOPE.
How about to America? A bit, but not much.
CHina? HUGE.

I’m aware of all of this, We’ll see what happens I’m not at all convinced that the current administration is smart enough to keep things contained to only China. The thin skinned man child in the Oval Office doesn’t think strategically or tactically, he is a reactive mess.

The morons advocating for a trade war are beyond stupid. They must really hate how well the economy is going.

It will effect Tesla the least.

Luxury goods have greater price elasticity.

Nope.
Tesla sales in China WILL be impacted by this.
OTOH, they have sold less than 20,000 EVs in china over the last 4 years. California and Norway are EACH far more important than all of China.
And as far as China being #2 buyer of Model 3, that is a none issue as well. America, Canada, Europe, Australia, etc will all be glad to buy Model 3 at a faster pace.

Trump couldn’t win a game of checkers let alone chess. China plans seral moves ahead. Trump listens to Fox News and hears something he likes and goes after that shinny object.
Trump is a serial bankrupter and will do the same with GOP help.

wow, you are misinformed.

Hmmmm.
One wonders how, exactly, the writer Ron M is misinformed?

Mr. “Fool Cells” didn’t see it on Fox News, so he’s sure it’s fake news!
😆

It is beyond common knowledge that dumpster fire has filed bankruptcy so many times banks in the USA would no longer lend him a dime. I mean, how the fuk does one bankrupt a casino? The orange anuz opening his mouth for a few seconds proves his mind is melted from syphilis.

Well, if the trade sanctions against China were imposed by a President who was not weak, blustering, vacillating, ignorant, and repeatedly shown to cave in under any real pressure, then maybe those sanctions would produce desired results. Unfortunately, with the idiot Orange Wannabe Dictator occupying the White House, China understands that all they have to do is stand up to this weakling, this stupid bully, and he’ll cave. Really, it should have been expected by any expert in international affairs that with such a weak President, China would hit back hard.

Now, what I do not understand is why this article claims that China’s trade sanctions are going to hit Tesla harder than any other auto maker. China is GM’s #1 market; it’s not Tesla’s #1 market, by a wide margin. So why won’t it affect GM more than Tesla?

Because the legacy OEM’s, including GM have partnership and production facilities. So the import tariff only affects them against cars they do NOT make in China. I have no idea how many that is, but I bet it’s not a concern to them …

Opposed to Tesla, which does not have zero production facility yet. Part of the problem is that one cannot have one unless you form partnership with a Chinese company, which Tesla is very reluctant to do … so hence people question EM’s tweets, basically asking for it.

In scope of things, we as posting here, know very little how this will play out in the end.

I wish we could fix typos here …. pls???

Anyway, meant to say “Tesla, which does not have production facility yet.’ .. obviously

Thank you. I realized that very shortly after I posted that comment. (Pushy smacks his forehead… which really hurts when you’ve got hooves instead of hands! 😉 )

I think there was an article a few weeks back about Tesla negotiating to build a new auto assembly plant in China, but I don’t know if any deal was signed, and obviously that doesn’t help with the current situation.

The ignorant dumbass dictator isn’t in Washington.

Your right he actually spends 25% of his time at one of his properties on taxpayers money.

America imposed 50B on CHina and then CHina hit us with 3B. Now, America is going to hit China with another 50+B.

And you think that china is hitting us hard?
They have very little room to wiggle.
Most ppl do not realize what is involved here.
The number 1 export to China is Soybean, for their farms.
This will likely be the hardest hit of all our items, other than aircraft.
The number 2 export is recyclable garbage. Ideally, they will stop it and we will start recycling our own again.
The number 3 export are hogs. Most of those come from farms that CHinese gov bought. Any tariffs on those will actually hurt the chinese gov.

Seriously, out of 130B, more than 70B is from companies that CHinese gov and companies own.
Basically, CHina really has to stop this economic war that they have waged on the west, esp. America.
If we stop 20% of their goods from coming here, that is 1% of their GDP. That is a recession for them. If we stop have of theirs, that is a depression for them.

Funny that it took a ” a weak, blustering, vacillating, ignorant, and repeatedly shown to cave in under any real pressure President” to finally address a decades-old trade problem. What did all the previous “good” presidents do about it, including the America-Hating Muslim sympathizer Affirmative Action President half of America worshiped for 8 years?

This is good. Tesla will actually come out AHEAD, not behind. Over 4 years of selling in China, Tesla has sold less than 20,000 cars. China is NOT a real market for them. Yet. Hopefully Trump WILL escalate this. We export 130B to CHina. America had 18T GDP in 2016. IOW, CHina’s exports represents .7% of our GDP. We lose more in many of our mild recessions. China Exports 560B to us. China had 11T GDP in 2016. IOW, America is 5% of China’s GDP. This would be a GREAT depression to CHina’s economy. And if CHina dumps their American bonds, they COULD depress America’s money a bit. However, it would destroy CHina’s holding, AND would could massive inflation in CHina. In fact, if CHina were to dump even 10% of their bonds, they will be hit with more than 5% inflation. Also, per WTO rules, if 2-way trade between 2 nations is off by more than 10%, the one that is being hurt, can LEGALLY tariff. Technically, by WTO Rules, America has the RIGHT to tariff against CHina and they can not do a thing about it. IOW, for Trump to not have any issues, we would have to… Read more »

Will he? Or will the American people let him? Up to you …

What you said are mostly true…

But when the iPhone is made in China and accounts for about $300 of trade deficit and China only makes about $6 on the profit, was it China that drives that or US companies that drove that decision?

And now we made that expensive, will we move the factory to another 3rd world country or it would actually come back to the US?

What is the point of this trade war? Is it specifically to punish China or trying to move jobs back to US? Is this part of the ultimate plan of trying to be at war with China in the long term, or is this part of “bring jobs back” plan? Because it won’t do a thing about the other part as other 3rd world country will pick up the slacks.

50% Import Tariff on all products “Made in China”.
The tariff will help pay the China held US debt securities.
If China agrees in tariff free trade, reciprocate with tariff free trade.

NPNS! SBF!
Volt#671 + BoltEV + Model 3 (soon)

You realize that would crash the world economy overnight, right?

I’m not as sure as you are. Yes it will make many U.S. companies that sell “Made in China” products scramble and possibly go under if they cannot adjust quick enough. That’s why, if I were Trump I’d give those companies ample warning.

Trump: “In 365 days, if China continues to tariff U.S. imports unfairly, the U.S. will tariff ALL “Made in China” imports 50%.”

That might give Walmart and other U.S. companies a chance to diversify their products better.

NPNS! SBF!
Volt#671 + BoltEV + Model 3 (soon)

“50% Import Tariff on all products ‘Made in China’.
The tariff will help pay the China held US debt securities.”

You do realize, don’t you, that it’s American taxpayers who would be paying that very stiff tariff? Might as well just raise taxes by that much to pay off the Federal debt; it would amount to the same thing, and would be just as devastating to our economy, as well as devastating to international trade. As others have already said, that would cause a worldwide depression. Is that really what you want?

Yeah, it is why it is so baffling. These same types would be freaking out over a 50 percent sales tax, but call it a tariff and suddenly it’s all good. I thought R’s hated taxes, and deficits. What gives?

We literally have an insane person as President.

You obviously are not familiar with The Corbomite Maneuver.

NPNS! SBF!
Volt#671 + BoltEV + Model 3 (soon)

(⌐■_■) Trollnonymous

Here’s the US and China Trade….

China: Bend over
US: OK
China: Take it like a man
US: KY?
China: Shut the F up and take it!
US: ok

I take personal umbrage to your bypassing the courting ritual part, in “The Art of the Deal”, which stipulates the obligatory “grab your ankles”.

Tesla has far more to gain than to lose. Trump uses these things like bargaining chips. Trump will make a deal for better China domestic access.

I hardly believe starting a trade war is a good negotiating tool

Tell us more about these great deals Dump makes? Can you list one great deal he has made, ever?

Can anyone recall the last time that tariffs and trade wars were an uplifting event or at the end even a good idea?

Of course not, because it’s never happened.

Threatening a trade war might possibly be a good strategy with a bad actor like China. But abruptly just starting one, especially when we know that the Cheeto in Chief doesn’t understand strategy even enough to win a game of checkers… well, there’s no doubt this is going to be a disaster, and it’s probably going get even worse than it looks right now.

China is going to give the Orange Wannabe Dictator a lesson, the hard way, in what “The art of the deal” truly means.

I agree with Trump. China’s days of running free are done.

As a past POTUS once stated, ” either you are with us, or you are against us”. Now, if we can get the US back to what it used to be able to accomplish, like actually producing the stuff that it consumes. China will have to give a little, to get more in the way of balanced trade, and an eventual US neutral trade debt.

I think Dump started a trade war because Putin wouldn’t let him start a real one. Dumpy needs distractions from his many scandals, most of all Mueller closing in on him for conspiracy against the United States, Obstruction of Justice, Money Laundering, etc.

Yes, Dumpy really is insane enough to destroy the economy to distract from his many crimes.

All the posts here just show how ignorant Americans are about business dealing. China had 25% tariffs on Tesla always, therefore forcing Tesla to set up factories in China to avoid the tariffs penalty, but once Tesla does that, it’s technology and know how will spread to prop up Chinese Communist Party sponsored competing brands which/ will just copy and undersell Tesla to gain market share. US is a country divided by the livelihood it’s citizens depend on. The domestic industries whose employees are not affected by predatory underpricing will just act as Peter to rob his neighbors who are the Pauls that are in the merchandise industries that had to face it alone. People in healthcare, education, and government, military,retailing, importers jobs couldn’t care less before they being completely selfish will just chant consumers lose tune while they keep on sucking American bloods. All other countries have tariffs to protect their industries except US. Trump did the right thing, or else America will become a zombie. All of US citizens will lose their social security payments and medicare eventually.